Full Judgment Text
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PETITIONER:
THE WESTERN INDIA THEATRES LTD.
Vs.
RESPONDENT:
MUNICIPAL CORPORATION OF THE CITY OFPOONA
DATE OF JUDGMENT:
16/01/1958
BENCH:
ACT:
Municipality, Power of--Imposition of tax on cinema show-
Constitutional validity of enactment-Enhancement of such tax
Validity-Bombay District Municipal Act, 1901 (Bom.of 111
1901), s. 59(1) (XI)--Bombay Municipal Boroughs Act, 1925
(Bom. XVIII of 1925), s. 60.
HEADNOTE:
The appellant, a public limited company, was a lessee of
four cinema houses situated within the municipal limits of
Poona City where it used to exhibit cinematograph films.
The respondent, the Municipal Corporation of Poona, in
exercise of its power under s. 59(1) (XI) of the Bombay
District Municipal Act, 1901, levied with effect from
October 1, 1920 a tax of Rs. 2 per day as license fee on the
owners and lessees of cinema houses. That Act governed the
Municipality till 1926 and thereafter it was governed by the
Bombay Municipal Boroughs Act, 1925. The tax was enhanced
to Re. 1 per show on June 3, 1941, and to Rs. 5 per show on
June 9, 1948. By the suit, out of which the present appeal
arose, the appellant sought for a declaration that the levy
of the said tax, the rules framed in connection therewith
and the enhancement of the tax as aforesaid were illegal and
ultra vires. The trial court decreed the suit in part but
the High Court in appeal reversed the decision of the trial
court
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and dismissed the suit. It was contended on behalf of the
appellant that (1) the tax was not one covered by Entry 50
in List 11 of Seventh Schedule to the Government of India
Act, 1935, but was one on trade or calling covered by Entry
46 thereof, and, was as such governed by S. 142A of the said
Act and that (2) s. 59(1)(XI) Of the Bombay District
Municipal Act, 1901, was unconstitutional in that the
legislature had thereby delegated essential legislative
power to the Municipality to determine the nature of the tax
to be imposed on the rate-payers and completely abdicated
its function, leaving such power wholly unguided.
Held, that both the contentions must fail.
The first point was covered by the decision given in the
appellant’s other appeal, Civil Appeal No. 145 Of 1955 which
must also govern this case.
It was not correct to contend that the power delegated to
the Municipality under S. 59(1)(XI) Of the Bombay District
Municipal Act, 1901, was unguided. That section authorised
the imposition of such taxes alone as were necessary for the
purposes of the Act. The obligations and functions cast
upon the Municipalities by ch. VII of the Act showed that
taxes could be -levied only for implementing those purposes
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and none others.
Nor could it be said that the Provincial Legislature had
abdicated its function in favour of the Municipality. The
taxing power of the Municipality was made subject to the
approval of the Governor-in-Council by the section itself.
The marginal note to a section could not affect the
construction of the section if its language was otherwise
clear and unambiguous and the word ’modify’ connoted not
merely reduction but also other kinds of alteration
including enlargement. The substitution of the word I
reduce’ by the word I modify’ in the body of s. 6o of the
Bombay Municipal Boroughs Act, 1925, notwithstanding the
omission to do so in the marginal note, therefore, clearly
indicated the intention of the Legislature to widen the
scope of that section and, consequently, it could not be
said that the enhancement of the tax was not sustainable
thereunder.
Commissioner of Income Tax, Bombay v. Ahmedbhai Umarbhai &
Co., Bombay, [1950] S.C.R. 335 and Stevens v. The General
Steam Navigation Company, Ltd., L.R. (1903) 1 K.B. 890,
referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 146 of 1955.
Appeal from the judgment and decree dated February 10, 1953,
of the Bombay High Court in Appeal No. 953 of 1951, arising
out of the judgment and decree dated November 36,1951, of
the Court of
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Joint Civil Judge, Senior Division, Poona, in Special Suit
No. 76 of 1950.
H. D. Banaji, R. A. Gagrat and G. Gopalakrishnan, for the
appellant.
M. C. Setalvad, Attorney-General for India, S. N. Andley
and J. B. Dadachanji, for the respondent.
1959. January 16. The Judgment of the Court was delivered
by
DAS, C. J.-The appellant is a public limited company
registered under the Indian Companies Act, 1913. It is a
lessee of four cinema houses situate within the municipal
limits of Poona City known respectively as " Minerva ", "
The Globe ", " Sri Krishna " and " The Nishat ". It exhibits
cinematograph films, both foreign and Indian, in the said
four houses. The respondent, a body corporate, was governed
by the Bombay District Municipal Act, 1901 (Bom. III of
1901) up to June 8, 1926, and from then by the Bombay
Municipal Boroughs Act, 1925 (Bom. XVIII of 1925) up to
December 29, 1949, and, thereafter, by the Bombay Provincial
Municipal Corporation Act, 1949 (Bom. LIX of 1949). With
effect from October 1, 1920, the respondent, with the
sanction of the Government of Bombay levied on the owners
and lessees of cinema houses within the limits of the
erstwhile province of Bombay a tax of Rs. 2 per day as
license fee. Rules for the levy and collection of the said
tax were framed by the respondent. Those rules were amended
on or about June 3, 1941, enhancing the tax from Rs. 2
per day to Re. I per show. The rules were again revised on
or about June 9,1948, under which the tax was enhanced from
Re. I per show to Rs. 5 per show. At all material times
the tax was being collected at the last mentioned rate.
Section 59 of the Bombay District Municipal Act 1901
provided that subject to any general or special orders which
the State Government might make in that behalf any
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municipality (a) after observing the preliminary procedure
required by s. 60, and (b) with the sanction of the
authority therein mentioned, might
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impose for the purposes of that Act any of the taxes
mentioned in that section. After enumerating ten specific
heads of taxes, which a municipality could levy a residuary
category was set forth in cl. (xi) in the words following:-
"Any other tax to the nature and object of which he approval
of the Governor in, Council shall have been obtained prior
to the selection contemplated in sub-clause (1) of clause
(a) of section 60 ".
Ever since the appellant became a lessee of the said cinema
houses, the appellant has been making payments of the said
tax under protest.
After giving the necessary statutory notice to the
respondent, the appellant, on or about March 31,1950, filed
a suit in the Court of the Civil Judge, Senior Division,
Poona, being Suit No. 76 of 1950, against the respondent for
a declaration that the levy and imposition of the said tax
with effect from October 1, 1920, were invalid and illegal;
that the enhancement in the rates of the tax with effect
first from June 3, 1941, and then June 9, 1948, was invalid
and illegal and that the resolutions passed and rules framed
in connection with the levy, imposition, enhancement and
collection of the said impugned tax were invalid, illegal
and ultra vires, for a permanent injunction restraining the
defendants from levying or recovering and or increasing and
enhancing the said tax and for refund to the appellant of
the amounts of the tax collected from it and for costs of
the suit and interest. By its judgment dated November 30,
1951, the trial court held that the said tax was validly
levied and imposed, but that the increase and enhancement
thereof in 1941 and 1948 were illegal and ultra vires. and
that the suit was not barred under the Acts governing the
respondent. The trial court decreed the suit in part by
issuing an injunction restraining the respondent from
levying, recovering or collecting the tax at the enhanced
rate and passing a decree against the respondent for refund
of a sum of Rs. 27,072 with interest and costs. The
respondent preferred an appeal and the appellant filed cross
objections. But the High Court by its judgment and decree
dated February 10, 1953,
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reversed the judgment of the trial court and dismissed the
suit of the appellant with costs throughout. The
appellant’s cross objections were also dismissed. On
December 10, 1953, the High Court granted leave to the
appellant to appeal to this Court from the said judgment.
Hence this final appeal questioning the validity of the
impugned tax.
The first point urged in this appeal is that the law
imposing this tax is not covered by entry 50 in List II of
the Seventh Schedule to the Government of India Act, 1935,
but is really a tax on the appellant’s trade or calling
referred to in entry 46 and that, therefore, the amount of
tax cannot under s. 142-A of the Government of India Act,
1935 exceed Rs. 100 per annum. This point need not detain
us long, for it is covered by us in the appellant’s other
appeal No. 145 of 1955.
The second point urged before us in support of this appeal
is that s. 59(1) (xi) is unconstitutional in that the
legislature had completely abdicated its functions and had
delegated essential legislative power to the Municipality to
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determine the nature of the tax to be imposed on the rate
payers. Learned counsel for the appellant urges that the
power thus delegated to the municipality is unguided,
uncanalised and vagrant, for there is nothing in the Act to
prevent the municipality from imposing any tax it likes,
even, say, income tax. Such omnibus delegation, he
contends, cannot on the authorities be supported as
constitutional. We find ourselves in agreement with the
High Court in rejecting this contention.
In the first place, the power of the municipality -cannot
exceed the power of the provincial legislature itself and
the municipality cannot impose any tax, e.g., income tax
which the provincial legislature could not itself impose.
In the next place, s. 59 authorises the municipality to
impose the taxes therein mentioned " for the purposes of
this Act ". The obligations and functions cast upon the
municipalities are set forth in ch. VII of the Act. Taxes,
therefore, can be levied by the municipality only for
implementing those purposes and for no other purpose. In
other words it will be open to the municipality to levy a
tax for giving any of the amenities therein mentioned.
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The matter may be illustrated by reference to s. 54 which
enumerates the duties of municipalities. The first duty
mentioned in that section is that the Municipality should
make provision for lighting public streets and nobody can
object if it imposes alighting tax, which, indeed, is item
(ix) in s. 59(1). Take another example: It is the duty of
the Municipality to arrange for supply of drinking water and
it may legitimately charge a water rate which, again, is
item (viii) in s. 59(1). We do not for a moment suggest
that the municipalities may only impose a tax directly in
connection with the heads of duties cast upon it. What we
say is that the tax to be imposed must have some reasonable
relation to the duties cast on it by the Act. In the third
place, although the rule of construction based on the
principle of ejusdem generis cannot be invoked in this case,
for items (i) to (x) do not, strictly speaking, belong to
the same genus, but they do indicate, to our mind the kind
and nature of tax which the municipalities are authorised to
impose. Finally, the provincial legislature had certainly
not abdicated in favour of the municipality, for the taxing
power of the municipality was quite definitely made subject
to the approval of the Governor-in-Council. Under the
Indian Council Act, 1861 (24 & 25 Vic. c. 67) the Governor-
in-Council might mean the Governor in Executive Council or
the Governor in Legislative Council. If the reference in s.
59(1)(xi) is to the Governor’s Legislative Council, then
there was no improper delegation at all, for it was subject
to the legislative control of the Governor in Legislative
Council. The Governor’s Legislative Council was composed of
all the members of the Governor’s Executive Council besides
a few other persons. Therefore if the reference was to the
Governor in his Executive Council even then, from a
practical point of view, the ultimate control was left with
the Governor’s Legislative Council. We need not labour this
point any further, for on the first three grounds the
delegation of legislative authority, if any, is not
excessive so as to make the exercise of it unconstitutional.
In our opinion the impugned section did lay down a principle
and fix a standard
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which the municipalities had to follow in imposing a tax and
the legislature cannot, in the circumstances, be said to
have had abdicated itself and, therefore, the delegation of
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power to impose any other tax cannot be struck down as being
in excess of the permissible limits of delegation of
legislative functions.
The last point urged by learned counsel for the appellant is
that, under el. (xi) of s. 59(1), the enhancements of the
rates of the tax in 1941 and again in 1948 were illegal in
that the municipality had no power to do so under the Bombay
Municipal Boroughs Act, 1925. According to learned counsel
for the appellant the judgment under appeal upholding the
validity of such enhancements cannot be supported under s.60
of that Act. That section runs as follows:-
" Power to suspend 60(1)Subject to the requirements of cl-
reduce or abolish ause (a)of the proviso to section
any existing tax 58 municipality
may except as otherwise
provide in clause provided in
clause (b) of the proviso to section 103 at any time for
any sufficient reason, suspend, modify or abolish any
existing tax by suspending, altering or rescinding any rule
prescribing such tax."
(2) The provisions of Chapter VII relating to, the
imposition of taxes shall apply so far as may be to
the suspension, modification or abolition of any tax and to
the suspension, alteration or rescission of any rule
prescribing a tax."
Reference is made to the marginal note where the words used
are " power to suspend, reduce or abolish any existing tax
". It is suggested that the word it modify " in the body of
the section in between the words " suspend " and " abolish "
should be construed in the sense of reduction. The marginal
note, according to him, shows that the several words were
used in the section to indicate a progressive diminution in
the quantum of tax until it was completely gone. Reference
is made to the root meaning of the word " modify " which is
to reduce or make less but does not cover the idea of
enhancement. In the first place, the marginal note cannot
affect the construction of the language used in the body of
the section if it is otherwise clear and unambiguous (see
Commissioner of
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Income Tax, Bombay v. Ahmedbhai Umarbhai & Co., Bombay) (1).
In the next place, it should be borne in mind that s. 67 of
the Bombay District Municipal Act (Bom. III of 1901) which
was formerly applicable to municipalities used the word "
reduce " in between the words " suspend " and " abolish "
and that that section had been reproduced is s. 60 of the
Bombay Municipal Boroughs Act, 1925, but that in the process
of such reproduction the word "reduce" was dropped ,and the
word "modify" was introduced. In the marginal note,
however, the word " reduce " was not substituted by the word
" modify ", apparently through inadvertence. If the word "
modify " is to be read as "reduce", then there could be no
point in the provincial legislature substituting the word "
reduce " by the word "modify". This change must have been
made with some purpose and the purpose could only have been
to use an expression of wider connotation so as to include
not only reduction but also other kinds of alteration.
Section 76 of this very Act also refers to " modification
not involving an increase in, the amount to be imposed which
makes the sense in which the word " modify has been used in
this Act perfectly clear, namely, that there may be a
modification involving an increase. Reference may also be
made to the decision of the Court of Appeal in England in
the case of Stevens v. The General Steam Navigation Company,
Ltd. (2). " Modification ", according to Collins M. R. in
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his judgment at p. 893, implied an alteration and the word
was equally applicable whether the effect of the alteration
was to narrow or to enlarge the provisions. In our opinion
the dropping of the word " reduce " and the introduction of
the word ’modify" in the body of s. 60, of the Act under
consideration clearly indicate an intention on the part of
legislature to widen the scope of this section and the High
Court was right in so construing the same.
No other point was urged in this appeal and for reasons
stated above this appeal must be dismissed with costs.
Appeal dismissed.
(1) [1950] S.C.R. 335 at P. 353. (2) L.R. (1903) 1 K.B.
890.
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